Impacted by a demand slump due to multiple factors including inflation, China’s slowdown, and the Ukraine crisis, the global smartphone market sales declined 10% Year on Year (YoY) and 4% Month on Month (MoM) in May 2022. With this decline, the global smartphone market sales declined to 96 million units.
According to the Counterpoint Research’s Market Pulse Service, this was the second consecutive month of MoM decline and the 11th consecutive month of YoY sales decline.
The smartphone market is yet to reach the pre-pandemic levels even after a “V” shaped recovery following the first Covid-19 wave in 2020. Supply constraints and persistent Covid waves were the prominent reasons for the negative impact on the smartphone market in 2021. This year, the component shortages have been stabilizing though yet to fully resolved.
Inventory build-ups, declining shipments and order cuts are fallout of the low demand for smartphones. The second quarter is expected to bear the brunt in terms of sales before the situation improves in H2 2022.
Despite a continuous negativity throughout the summer, experts are hopeful for gradual improvement during H2 due to a more normalized situation in China, continued improvement in the supply-demand balance in tech supply chains, and a better macroeconomic landscape if inflation peaks in the mid-year period before heading back down.
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In addition to geo-political issues, local promotional events such as 618 in China, back-to-school in August, Diwali in India followed by Christmas and New Year are expected to fuel the market growth in the coming months.
Furthermore, prominent launches such as the new Samsung Galaxy Fold series and the iPhone 14 series, may ignite some demand.
“The demand for a smartphone especially in the advanced economies is driven by replacement, which makes it a discretionary purchase. And inflationary pressures are leading to pessimistic consumer sentiment around the globe with people postponing non-essential purchases, including smartphones. The strengthening US dollar is also hurting emerging economies. A segment of consumers is likely to wait for seasonal promotions before purchasing to offset some of the cost pressures,” said Tarun Pathak, research director, Counterpoint.
The prolonged economic slowdown and lockdown in China collectively impacted the domestic demand as well as the global supply chain,’ said Varun Mishra, senior analyst, Counterpoint Research.
“Chinese smartphone market slight recovered in May after lockdowns eased, however remained 17% below as compared to the same period in May 2021,” adds Mishra. He further adds that it may be needed to add a new baseline market size defined for China’s smartphone market.
“Additionally, the uncertainty created by the ongoing Russia-Ukraine crisis, is also hurting demand in Eastern Europe. None of the OEMs seems to be spared from the negative impact on demand caused by a mix of these factors,” adds Mishra.